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JobKeeper 2.0

Posted by Lisa Qiu, Morris Maroon on 29 Sep 2020

Extension period

On 21 July 2020, the Federal government announced an extension to the JobKeeper scheme from 28 September 2020 until 28 March 2021. 

The JobKeeper enabling directions allow employers to give certain directions to employees, about changing their hours of work, location of work, duties and usual days/times of work, if that employee is the recipient of JobKeeper payments. Read all about the JobKeeper enabling directions here and here.  

There are two separate extension periods which have different turnover tests and JobKeeper payment rates:

  • Extension 1: 28 September 2020 to 3 January 2021; and,
  • Extension 2: 4 January 2021 to 28 March 2021.

The current existing Fair Work Regime that has been modified will extend for another 6 months subject to the employer being eligible under JobKeeper and having made the transition.

Transition to JobKeeper 2.0

If an employer was not eligible under JobKeeper 1.0, they may be eligible under JobKeeper 2.0.

In accordance with the ATO guidelines, employers do not need to reassess eligibility or employee nomination, but must calculate their GST turnover by reference to the actual decline in GST turnover for the quarter. This must be done prior to completing the monthly declaration for November.

Legacy Employers

These are employers who previously qualified for JobKeeper 1.0 but are no longer qualified under JobKeeper 2.0. Legacy employers are those who wish to continue to access the modified Fair Work Regime and continue to suffer at least a 10% decline in turnover.

Assessing turnovers

Under JobKeeper 1.0 there were a number of options available for employers to calculate the GST turnover when determining their eligibility for the scheme. GST turnover could have been calculated on an accrual or cash basis, or when their accounting records recognised income.

The flexibility under JobKeeper 1.0 is not available under JobKeeper 2.0. JobKeeper 2.0 requires employers to calculate their GST turnover by reference to the actual decline in GST turnover for the quarter. That is, the test is calculated by reference to actual GST turnover as reported in BAS. For those businesses that are not registered for GST, they must determine sales for the relevant quarter in the same way they would have reported those sales in a BAS as if they were registered for GST.

The turnover test for each extension period is:

  • Extension 1: 28 September 2020 to 3 January 2021
    • Show actual GST turnover declined in September 2020 quarter relative to a comparable period (generally corresponding quarter in 2019)
  • Extension 2: 4 January 2021 to 28 March 2021.
    • Show actual GST turnover declined in December 2020 quarter relative to a comparable period (generally corresponding quarter in 2019)

An alternative test will be available for employers where the normal comparison period is not appropriate. Employers who have been in business for less than a year would need to rely on the alternative test.

The lack of options under JobKeeper 2.0 to calculate GST turnover when determining eligibility will mean that some businesses will be unable to access JobKeeper 2.0. Employers who bill clients in advance are likely to be impacted by the lack of options.

Secondly, the requirement for GST turnover to be calculated by reference to the actual decline in GST turnover for the quarter will mean that employers will need to have their financial records up to date to confirm eligibility.

Payment rates

The rate will depend on the hours worked in each extension period by the eligible employee or that the business is actively engaged in the business.

The two rates:

Tier 1 rate:

Tier 2 rate:

This rate applies to:

  • eligible employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and,
  • eligible business participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect.

This rate applies to:

  • any other eligible employees and eligible business participants.

For more information on the payments rates, see https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-extension-announcement/

Effect on Employees

JobKeeper can now be applied to employees commencing full time or part work after 1 March 2020 (but before 1 July 2020). Casual employees who have now been employed for 12 months may now also be eligible. For more information, see https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-extension-announcement/

If you require assistance with any of the above, please don’t hesitate to contact a member of Coleman Greig’s Taxation team, or Coleman Greig’s Employment Law team, who would be more than happy to assist you today.